US gaming platform Roblox licensed for release in China, as company plans to go public

05-Dec-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Gaming unicorn Roblox and its Chinese partner Tencent Holdings have secured two licences from the Chinese government to launch the former’s massively popular sandbox gaming platform in China on both mobile and PC, two weeks after the California-based company filed to go public in November.

The gaming platform has become enormously popular worldwide, particularly among children and teens, as a digital sandbox in which gamers can create their own characters, buildings, parks and even custom game modes. Some creators have replicated classic games such as Pokemon, Super Mario 64 and Counter-Strike inside the platform.

Unlike most other markets, China requires companies to obtain a government licence before releasing games in the country, a process which can take months, if not years. Roblox was one of 42 titles approved by the National Press and Publication Administration, the Chinese government organ overseeing imported games, on Wednesday.

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China also requires gaming companies to work with a local publishing and operations partner. In 2019, Roblox and Tencent formed a joint venture, and the duo have been working towards getting a government licence since. The world’s largest gaming company by revenue, Tencent also publishes games by many gaming giants including Nintendo, Riot Games, Supercell, Activision Blizzard and Ubisoft.

“Tencent’s receipt of approval to publish the Chinese version of Roblox on December 2 could spur a big uplift to sales upon release which may come in 2H21, in our view,” Bloomberg Intelligence analysts Matthew Kanterman and Vey-Sern Ling in a research note.

The two analysts said that because Tencent had a large backlog of games awaiting release, Roblox’s China release could take some time.

But they remained bullish on the gaming platform’s potential in China. “In a scenario where Roblox China achieves 10 million daily active users in its first year with average bookings per user in line with its global average, net bookings from China could eclipse $500 million,” they wrote.

Roblox had not replied to queries by the Post at the time of publication.

In February, the company was valued at $4 billion after a Series G funding round led by famous venture capital firm Andreessen Horowitz. According to Crunchbase, Roblox has raised more than $335 million in venture capital.

A China release could boost investors confidence further: the country is predicted to be the world’s biggest gaming market with estimated revenue of $44 billion by the end of this year, followed by the US with $41.3 billion, according to a recent report by market research firm Newzoo.

According to Roblox’s Chinese website, the China release of the platform will focus heavily on collaborations with schools and educators, and it is touted as a potential educational tool for science, technology, engineering and mathematics (STEM) students.

That said, Kanterman and Ling wrote in the research note that Roblox will face stiff competition in China, including from Minecraft, Microsoft’s popular sandbox game.

“Still, peer NetEase’s China version of Microsoft’s Minecraft has achieved 400 million registered users, signalling demand for interactive, creative experiences in the country,” they said.


Category: China

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